Bumpy road ahead for Philippine economy

The Philippine economy will continue to go through a rough patch this year although the road will not be as bumpy as in 2011, according to the National Economic and Development Authority (NEDA).

NEDA senior economic development specialist Richard Emerson D. Ballester said the Philippines will likely sustain its growth momentum in 2012, anchored on high domestic demand and the China factor. (Click here for copy of presentation.)

“The government is optimistic that 2012 would be significantly better than 2011 but remains vigilant and is closely monitoring external developments that pose a risk to the country’s growth,” Ballester said at last week’s CORE Logistics seminar at the New World Hotel in Makati.

External risks being monitored are balance sheet issues and weak consumption in the US and fiscal problems and sluggish output in the Eurozone. Internal risks include weak industry output, damages in agriculture and infrastructure due to natural calamities, and effective implementation of the disbursements acceleration program.

“We will accelerate fiscal spending and infrastructure outlays as well as diversify domestic and external trade,” Ballester said. “Also, we will strengthen economic relations with fast-growing ASEAN economies and seize the opportunity from China rebalancing.”

Based on the presentation, public construction will significantly contribute to growth in 2012. Government construction is expected to grow 4% to 4.6% from -0.7% last year.

Government has already released 72.1% or P150.2 billion of the P208.3 billion allocation for capital outlays for various infrastructure projects of such agencies as the Department of Public Works and Highways, Department of Education, and Department of Agriculture.

Also expected to boost economic growth are 16 projects costing P140.8 billion under the Public-Private Partnership. These projects include those related to school infrastructure; the Light Rail Transit Line 2 East Extension and operations and management (O&M) privatization; North Luzon Expressway-South Luzon Expressway Connector Road; O&M of Puerto Princesa Airport; O&M of Laguindingan Airport; New Bohol (Panglao) Airport; Mactan-Cebu International Airport Passenger Terminal Building; Cavite-Laguna Expressway; and the establishment of cold chain system in strategic areas.

NEDA expects a 5% to 6% growth in gross domestic product this year from 3.7% last year and a 4-5% rise in gross national income from 2.6%.

Investments are seen jumping 8.9-10.2% this year, less than the 11.1% growth posted last year.

The target for export growth is 8.4% 9.3% from -3.8% in 2011, and imports growth 9.7% to 10.4% from 1.9%.